Peugeot seeks partners for compressed-gas hybrids

GENEVA, March 7 (Reuters) - PSA Peugeot Citroen plans to talk to other carmakers including alliance partner General Motors Co about sharing development of low-cost compressed gas hybrids.

Peugeot wants to pool the cost of developing and manufacturing the "Hybrid Air" technology, expected to come in below 500 million euros ($650 million), innovation director Jean-Marc Finot said at the Geneva auto show.

The cash-strapped French carmaker's Citroen stand at the show displayed a C3 subcompact powered by the compressed nitrogen and petrol transmission it developed as a prototype with parts maker Robert Bosch.

The first cars using the technology are due to hit the market in 2016.

"If we're to meet that timetable, we can't hang around," Finot said in an interview. Partnerships will need to be agreed within a few months, he said.

GM would be a natural collaborator on the new drivetrains in Europe, he said, adding that Peugeot is also seeking a partner for China, where it operates joint ventures with Dongfeng Motor Group and Chongqing Changan.

A GM spokesman said the technology "is currently not part of the alliance discussions" with Peugeot, declining to comment further.

Peugeot, which is cutting more than 10,000 jobs as it struggles to stem losses and expand overseas, has said the Hybrid Air cars would be priced below 20,000 euros.

Unlike electric hybrids such as Toyota Motor Corp's Prius, which supplement a conventional engine with an electric motor, the Peugeot transmission requires no costly batteries.

Instead it uses a hydraulic motor, driven by nitrogen compressed with energy recovered from braking and deceleration, to assist the petrol engine.

That can cut CO2 emissions by almost a third in city driving conditions, the company says.

European hybrid sales rose about 50 percent last year, according to Peugeot data, even as the regional auto market shrank to a 17-year low.